The cost to build the London-to Birmingham stretch of UK’s high-speed HS2 railway has increased by a fifth within just four months. This highlights the difficulties the government faces in completing the project.
Last week, Prime minister Rishi sunak announced that the southern leg would be built even though it was not going to continue to Manchester. He claimed that the move would save £36bn.
The Department for Transport also published figures around the same time showing that the cost estimate for the London to Birmingham leg in 2019 prices had increased sharply, from £45bn (£45bn) in June, to £54bn (£54bn) in October.
Calculations show that this figure would be £68bn at today’s prices.
The original budget for the Y-shaped rail, which would have linked London to Manchester and Leeds via Birmingham was just under £33bn when it approved early 2012.
In the decade that work began on the railway, the London-to Birmingham line has suffered from budget overruns, delays, and accusations of mismanagement.
Mark Thurston, who held the position for six years before resigning in July, is no longer the chief executive of the state-funded organization that runs the project.
Jon Thompson, former chief executive of Financial Reporting Council has been appointed interim executive chair while a successor is sought.
Professor Stephen Glaister is a transport economist from Imperial College London. He said that there was “something fundamentally wrong” with the governance, pointing out heavily redacted minutes of boardroom meetings and “a persistent absence of transparency”.
In a press release, the transport department stated that “the government [was] strengthened in order to increase focus on cost-control and increase government supervision”.
The i Newspaper previously reported on the DfT’s disclosure. Last week the government stripped HS2’s management of responsibility for rebuilding Euston station, the London terminus of HS2, and one of the most expensive parts of what remains of the project.
There is no detailed plan yet for the site despite the fact that homes and businesses were demolished in preparation for work.
Sunak announced that he would work with private developers to create a Canary Wharf style development around Euston, which would help subsidise the reconstruction of the station.
The government has said that the Euston rebuilding may not be finished without private investment. However, the transport department insists that HS2 is going to run up to the station.
Internal Report Last Year pointed out that the problem was more widespread.
The report found that two of the four engineering consortiums hired for the project did not possess “sufficient capability and capacity to manage the various obligations placed on them”.
The report also criticised that the project recorded costs at 2019 prices. The figures did not reflect “what was paid or what is being charged”.
Last week, a top civil servant warned that Sunak’s decision not to build the second phase of HS2 but instead only build the first phase and scrap the line north Birmingham has damaged the economic rationale of the project.
In a letter sent to the House of Commons Public Accounts Committee, Dame Bernadette Kel, permanent secretary of the DfT, wrote that comparing the estimated costs of phase one with the estimated benefits of the project would be a poor use of money.